Oppenheimer downgraded Walmart (WMT) stock to "Perform" from "Outperform." The firm removed its $140 price target. Oppenheimer cited a less attractive near-term risk-reward scenario. Walmart shares declined during Tuesday's trading session.
Oppenheimer cited three primary concerns for its cautious stance. These include top-line headwinds in the U.S. pharmacy business. The Inflation Reduction Act partly contributes to these headwinds. This could cause sales to fall short of expectations.
The firm also pointed to a "peakish valuation." Wall Street forecasts are ahead of Walmart's long-term guidance, leaving less room for upside. Despite near-term concerns, Oppenheimer remains favorable on Walmart's long-term prospects.